February 2012: After Strong 2011, Twitter Ad Revenues to Grow 83% to $259 Million in 2012

Advertising revenues at Twitter grew 233% to $139.5 million in 2011—the company’s second full year of selling advertising—and strong international growth is expected to push the company’s ad revenues to $259.9 million in 2012, according to a new forecast by eMarketer.

The new forecast includes eMarketer’s first estimate of Twitter ad revenues for 2014. It also essentially confirms eMarketer’s previous projections from September 2011, which were cut slightly after Twitter rolled out several advertising offerings later than expected, including its self-service ad platform.

“Twitter is positioning itself for strong growth over the next few years,” said eMarketer principal analyst Debra Aho Williamson. However, “to achieve a trajectory similar to Google and Facebook, Twitter still needs a proven, turn-key ad platform and a significantly bigger user base to deliver the reach advertisers demand.”

Twitter launched a self-service advertising platform in November, but Williamson said the “verdict is still out” on whether advertisers will adopt the program with the same enthusiasm that fueled rapid growth for Google and Facebook.

“Twitter does have an advantage over its competitors, however, in terms of advertising performance,” said Williamson. Last year, Twitter reported that 80% of advertisers return to use the products again, while the average engagement rate for Promoted Tweets was between 3% and 5%.

Another source of growth comes from Twitter’s international expansion. Currently, 90% of Twitter’s revenues come from US sources, with other countries contributing just $26 million to its ad revenues this year, eMarketer estimates. The site will have diversified its revenue sources slightly by 2014, but 83% of dollars will still come from the US.

“Twitter’s continued expansion of its international sales force will help more than double the company’s overseas revenue each year for the next two years,” said Williamson.

LinkedIn, which has lower ad revenues and a lower growth rate overall than Twitter, gets a greater share of its ad dollars from outside the US. This year, when the site will see $226 million in ad revenues, a 46.1% increase over 2011, 32% of that money will come from abroad.

By 2014, US advertisers will account for 60% of LinkedIn’s $405.6 million in revenues, according to eMarketer estimates. This forecast represents an upward revision of LinkedIn’s revenues and growth rate compared with eMarketer’s previous forecast, issued in September 2011, due to a stronger-than-expected advertising program at the site.

eMarketer forms its estimates for advertising spending on Twitter and LinkedIn through a meta-analysis of estimates on consumer usage, marketer usage, ad pricing and impressions, as well as revenue estimates from research firms, company reports and other sources. eMarketer also conducted interviews with industry executives who provided perspective on the companies’ advertising business and revenues.